When Chinese President Hu Jintao arrived in the United States this week for his first official visit, he knew he would get an earful about China's gargantuan trade surplus, the undervalued Chinese currency, a lack of respect for intellectual property rights and his country's sorry human-rights record. These are legitimate concerns that the Chinese ought to be taking more seriously. But the anti-Chinese campaign in the U.S. Congress is way off base.
More than 20 anti-China bills are still wending their way through Congress; most would punish Beijing for being an unfair trader, when, in fact, much of that trade has been good for both U.S. consumers and businesses, keeping prices low and boosting economic growth. The U.S. trade deficit with China reached $202-billion (U.S.) last year, but about half of China's exports stemmed from U.S. affiliates or licensees to their parent companies. And on the flip side, China has become the world's fastest-growing market for U.S. goods and services, with shipments totalling nearly $42-billion last year.
Mr. Hu underlined China's importance to the U.S. economy by making his first U.S. stops at the headquarters of software giant Microsoft and a Boeing aircraft assembly plant. Boeing is the largest U.S. industrial exporter to China, which recently signed a lucrative deal for 80 Boeing jets, one of a flurry of purchases of U.S. goods and services totalling more than $16-billion. Microsoft has its own billion-dollar deal with Chinese computer giant Lenovo to install the Windows operating system in its computers. That does not mean Chinese piracy will end overnight, but Beijing at last seems to be taking the problem seriously.
Senator Charles Schumer, a New York Democrat who has been a harsh critic of Chinese trade policies, is the co-sponsor of a nasty piece of protectionist legislation that would impose an added duty of 27.5 per cent on all Chinese goods, unless Beijing lets its currency float freely. But after a recent trip to China, he was more conciliatory, agreeing to put off a vote on the bill until September, because China is in the process of making changes that will help address U.S. concerns. President George W. Bush raised the currency issue again yesterday in his meeting with Mr. Hu, pressing for a further revaluation. The Chinese seem well aware they will be best served by a more flexible and open financial system. But they fear major disruptions that could occur not only in China, but throughout Asia, as a result of a sudden appreciation.
Mr. Hu is eager to show that China deserves to be treated on an equal footing with the major industrial powers, that it is prepared to meet its obligations as a responsible member of the international community and that the West has nothing to fear from its growing economic clout. The selling job is designed as much for home consumption as it is for his American hosts. Within the ruling Communist Party ranks, Mr. Hu's leadership is increasingly being questioned by conservative ideologues who dislike his embrace of globalization, resist international pressure for financial and other structural reforms and think the economic liberalization has gone too far. They want Beijing out of the World Trade Organization. Heavy-handed actions by U.S. legislators would only play into their hands.